CENTRAL Bank Governor Athanasios Orphanides yesterday warned against further delays in taking measures to consolidate the economy and improve the fiscal situation.
The comment came as latest stats showed that the economy grew slightly more than initially estimated in the fourth quarter of 2010, even though it still slowed from the third quarter.
For 2010 as whole, the economy expanded by a provisional 1.0 per cent, at the top end of finance ministry forecasts. It recovered from a 1.7 per cent contraction in 2009 and was buoyed by a rebound in tourism and financial services, Reuters reported.
Gross domestic product in the fourth quarter rose by a revised 0.5 per cent from the previous quarter, up from a flash estimate of 0.3 per cent released in February but slowing from 0.6 per cent growth in the third quarter. The third quarter figure was revised down from 0.8 per cent.
An improvement in trade, tourism and transport services helped the economy recover, the statistics department said in a statement.
While the broad services sector was positive, construction and manufacturing was still underperforming and remained negative, the reports said.
“I want to stress once more the importance of putting the country’s finances on a solid base,” Central Bank Governor Orpanides said yesterday, according to financial news portal Stockwatch.
“It is very important not to have further delays and at least some of the measures that will lead to long-term improvement of the finances should be put in place as soon as possible.”
Moody’s rating agency cut Cyprus’s credit rating in January, and Standard and Poor’s in November. Moody’s now rates Cyprus A2, and Standard and Poor’s rates Cyprus at A, both two notches lower than Fitch. Fitch now rates Cyprus AA-.
It placed the island on credit watch negative in January, saying it needed to assess risks to the island’s economy from lack of reform to its pensions system and its banks’ exposure to debt-ridden Greece.
Finance Minister Charilaos Stavrakis has said that a downgrade from Fitch was inevitable.
Orphanides said it was “in our hands to improve the situation, which would also help businesses a lot and lower the cost of borrowing and cut unemployment.”
The number of registered unemployed in Cyprus rose by 24 per cent year on year to 29,806 in February.
The unemployment rate rose to 7.4 per cent in January from 7.3 per cent the previous month.
The Governor spoke after a meeting with the chamber of commerce and industry (KEVE), which dealt with various problems faced by small and medium businesses like the shortage of money, the cost of borrowing, low demand and the practice of some in the market to stop payment of the cheques they issue.
KEVE said abusing this right without reason should stop and one way was to have a similar registry like the one for bounced cheques.
